Retirement Countdown

A straight-forward timeline to help your clients prepare for the decision to retire.

If you're thinking about retirement, there's no time like the present to get started. Ideally, you should begin your countdown to retirement ten years in advance.

Ten years before retirement

Estimate how much you expect to accumulate before you retire, based on your current investments and current investment rate.

Our calculator can help you with this exercise. Just put in your current salary, the number of years to retirement — and our calculator does the rest. It also lets you experiment with the variables, such as increasing your investments or aiming for a higher return.
Assess your retirement income resources, including Social Security. Consider the impact of taking Social Security benefits as early as you are eligible, at age 62, compared to delaying until you reach full retirement age, at between 65 and 67, or even later.
Do a quick calculation of your anticipated expenses, both fixed and variable. It won't be practical to go into too much detail at this point in the planning process. You can even use a percentage figure, if you like — say 70% or 80% of your current after-tax income.

Five years before retirement

Review your progress toward your goal. Going forward, this is an exercise you should perform every year.
Take a careful look at your asset allocation. If you have maintained a highly aggressive portfolio, one that is heavily invested in stocks, high yield and international funds, you may want to shift some money into more conservative assets. However, keep in mind that you want your investments to continue to grow for 20 years or more in retirement, so don't be too conservative in your approach.

Three years before retirement

Create a detailed written plan. Update your ten-year estimates and your five-year allocation review. Generate a firm budget and match your income resources against your budget. Be sure to include all your assets in your written plan, including your home and any income property.
Pay special attention to health care. Although you will be eligible for Medicare at age 65, you may need to set aside money to supplement the benefits you will receive.
For example, if your retirement investments total $100,000, limit your annual withdrawals to $4,000 to $5,000.
As you consider turning your investments into income, remember that it's typically recommended that investors not withdraw more than 4% to 5% of your investments annually.

What happens if you withdraw more? Your savings could run out if you experience just one or two bad years in the market.

One year before retirement

Consolidate retirement investments that remain in any former employer's plans. Consider rolling them over to a single IRA that will allow you convenience and control in planning for income.
Repay any outstanding loans from your workplace retirement plan BEFORE you retire. Loans outstanding at the time of retirement are immediately taxable.
If you have IRAs at multiple financial institutions, consider rolling them all into a single IRA account at one financial institution. Diversification among specific investments is a good idea, but concentrating assets with a single or few trusted financial institutions makes good sense, especially in retirement. It makes managing your money much easier.
Contact your employer's benefits department to make sure that your current retirement plan assets will be available when you need them. A rollover to an IRA typically takes less than 90 days, but it can vary depending on the institutions involved. Stay on top of this process to make sure it happens according to your timeline.
Create a separate "retirement income" money market account. Keep your income account separate from your investment accounts — such as your IRAs — and fund your income account with withdrawals from other sources. Separate accounts will make it easier to manage your asset allocation — and your regular income.

The resource you can trust

AARP Financial's primary objective is to help people attain their retirement goals.
When you refer your clients to AARP Financial, you can be confident that they'll receive:

Guidance from non-commissioned financial counselors.
Easy start programs with as little as $100.
Expertise on retirement solutions from our Investment Counselors, who have an average of 10 years experience.

Need more reasons?

See why you can refer your clients with confidence to AARP Financial. Learn more.

Call us toll-free at 1-866-651-3262.